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MAPUTO (Reuters) - Police opened fire on demonstrators protesting against rising prices in Mozambique's capital on Wednesday, killing at least six people including two children, police and hospital sources said.

The violence was the worst in the poor southern African country, home to 23 million people, since 2008.

The government said it had the situation under control.

"We call on everyone to be calm and serene. We ask for everyone's collaboration," Interior Minister Jose Pacheco said on Radio Mozambique.

Some police officials said police had shot live ammunition after running out of rubber bullets, although a national police spokesman told a news conference live ammunition was not used, according to Portugal's Lusa news agency.

Police officially said three people were killed, including two who were shot dead. Hospital and police sources said the death toll was at least six.

The president is expected to address the country on the protests soon, Lusa quoted a presidential spokesman as saying.

The protests appeared to have been touched off when the government increased prices on bread by 30 percent on Wednesday as wheat prices have soared around the world.

Residents of one of the world's poorest countries say they have been hit hard by rising costs for basic necessities including bread, with rising costs for fuel and other essentials adding to their troubles.

"The government underestimated the situation and can't understand or doesn't want to understand that this is a protest against the higher cost of living," Alice Mabota, head of the Mozambican League of Human Rights, told Lusa.

"The rise in bread prices and other essential goods is not the reason for the protest, but only the drop of water that spilled the cup."

An estimated 70 percent of Mozambique's population live below the poverty line, according to the CIA World Factbook. The country is heavily dependent on imports from South Africa, which have become more expensive in recent months as the South African rand currency has strengthened.

"I can hardly feed myself. I will join the protest because I'm outraged by this high cost of living," Nelfa Temoteo, who lives in the densely populated Malhazine suburb, said.

Maputo police also called for calm as the riots spread throughout the city.

"There is looting and vandalization. Shops including banks in the Central Business District are closed," Chefo said.

In 2008, at least six people were killed in Mozambique in protests in over high fuel prices and living costs. The government agreed to cut the price of diesel fuel for minibus taxis.

Despite its poverty, Mozambique is one of the fastest growing economies on the world's poorest continent. Its tourism sector is set to increase five-fold to $2 billion in the next several years as more people flock to its beachfront resorts.